Product assortment at Winmart+ in Ho Chi Minh City

Abstract

In order to survive in a competitive environment and to establish a strong position in the market, retailers should be able to manage their operational activities efficiently while providing an adequate customer service level. Activities such as store and inventory management, establishing relationships with the suppliers, ordering and purchasing of products all contribute to operational costs, while additional costs, or rather loss of revenue, may incur due to poor quality procurement and customer dissatisfaction. An important trade-off in finding the right product assortment is that increasing variety increases customer satisfaction but has a negative effect on operational costs. As a result, when a retailer decides on which suppliers to work with and what product assortment to carry, it is important to understand the expectations and the purchasing behaviors of customers. Assortment and inventory decisions are two of the most important decisions in retailing. Marketing management and retailing textbooks highlight the importance of product assortment in achieving differentiation and satisfying the wants of target shoppers better than the competition. However, providing a product assortment that can optimize sales and fulfill the needs of various customers is not easy work. Moreover, the expansion into a variety of locations challenges retailers to make different product assortments across their store chains. Particularly, recent research highlights the key role of product assortment in satisfy customers, increase sales and profit. In practice, at Winmart+ in Ho Chi Minh city, the mini-mart store chain, is facing an increase in days of inventory outstanding (DIO) from July 2020 to January 2021. In addition, the sum of non-moving stock at each store in Ho Chi Minh City takes a really high percentage. Based on in-depth interviews with important stakeholders, secondary data for support, and literature, the current product assortment is the main problem that leads to these symptoms. This thesis will explore the root causes and propose the proper solution to solve them.